3 Ways to LOSE MONEY when Dropshipping with Aliexpress

Discover the 3 ways newbies LOSE MONEY when Dropshipping with Aliexpress.
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In this video, we discuss 3 ways that newbies often lose money with their dropshipping businesses. These are:

Way #1: Handling refunds wrong – 0:58 (click to skip ahead)
Way #2: Picking the wrong suppliers – 6:55 (click to skip ahead)
Way #3: Being lazy with scarcity timers – 9:21 (click to skip ahead)

Way #1 that Dropshippers are Losing Money: Not Handling Refunds as a Dropshipper Correctly

A common question that we get asked here at Wholesale Ted is how to handle refunds when dropshipping. In the past, we’ve given some lazy advice on this issue. We want to correct it in this video so that our viewers don’t lose unnecessary money.

If you handle refunds wrong, you risk being scammed by false refunders. These are people that get an item in excellent condition, but that try and claim that it arrived damaged and ask for a refund. They hope to get their item for free. To try and bully you into giving it to them, they’ll threaten you with things like chargebacks or paypal disputes.

Here is the solution to overcome false refunds:

#1: Only allow refunds for faulty products
#2: Require the customers to mail the products back to you at their expense

Requiring a customer mail an item back to you at their expense is standard for the online retail industry. Shopify have a refund policy that you can auto-generate and use. In it, it requires that a customer mail the item back to you. The Shopify refund policy also states that the customer is expected to pay for the return shipping, and that a refund will only be issued once an item has been inspected.

If you live outside of the USA, this is tricky because it is not industry standard to require a customer to have to mail an item to another country to get a refund (as that would be extremely expensive). What you can do it get a free Shopito address (or something similar) and use this as your return-to address. If a customer sends an item to it and it arrives, the chances are that it is actually faulty (since they bothered to pay for the shipping and spend the time to return it) and you can issue them a refund.

If you live in the USA then you can inspect it and issue a refund if found to be faulty. You can then list it on eBay to recoup costs or sell it in second hand stores.

We do NOT suggest using the Aliexpress return policy as that would require you to ship the item back to the Chinese supplier which is not cost-efficient.

Way #2 that Dropshippers are Losing Money: Picking the Wrong Suppliers

If you use a lot of different suppliers on your store, then you risk a customer purchasing multiple items from different suppliers. If they do this, then their items will arrive in separate packages.

This is not the end of the world. Thanks to Amazon normalizing this, you can tell the customer that the items are going to arrive in different packages to expedite the shipping process. If you warn the customer in-advance, then it is usually fine.

But even though you can get away with it, customers prefer to have their items arrive in a single package. That is why you should try and use as few suppliers as possible in your store. In addition, you should try to use the same suppliers for both front-end products and upsells. Prioritize sellers that are selling multiple related items, even if they cost more.

Way #3 that Dropshippers are Losing Money: Being Careless with Scarcity Timers

When you are promoting items in your store with Facebook ads, a key way to get customers to buy then-and-there without price-checking it against other stores (like Amazon) is to use scarcity. Scarcity is saying things like “hurry – this item is 50% off, but only for the next 1 hour.”

Now that isn’t true since you’ll just be “repeating” the sale over-and-over again, but that false scarcity works and isn’t just used by dropshippers: large retailers do it too.

One way to encourage scarcity is to use a scarcity timer. There are several apps for Shopify which do this. And they work great – until you abuse them by putting them on every single page. If you do this, then when customers browse through your site, they’ll see that all products have them – and the illusion of scarcity will be ruined. The customer won’t trust you and you’ll lose the sale.

To solve this, be sure to do 1 of 2 things with scarcity timers:

#1: Strictly limit which pages you put them on.
#2: Put them on pages not accessible by customers browsing your site.

Those are our tips for you. Thanks for watching!